Our bodies in middle age don’t always perform like the well-oiled machines of our youth. But the doctors and surgeons we rely on to keep us moving often act less like a NASCAR pit crew and more like mechanics at neighboring garages who may not speak to one another.

When medical providers don’t coordinate with one another, “patients have to piece it together for themselves,” said Stuart Simpson, vice president and general manager in the reconstructive division of Stryker
SYK, +0.86%
, the medical device maker.

In an effort to change this, the Centers for Medicare & Medicaid Services (CMS) has launched a program to improve care coordination in hip and knee replacements for 55 million Medicare beneficiaries, those age 65 and over and others with certain disabilities. As of April 1, about 800 hospitals in 67 regions throughout the country are participating in a mandatory program where Medicare pays hospitals retroactively for an entire episode of care, a period lasting up to 90 days after hospital discharge.

The program represents one of the biggest steps to date in a broader effort to reward quality over quantity in medical care, a move toward so-called “value-based” payments. “It’s a pretty dramatic step for CMS,” said Kenneth J. Ottenbacher, professor and director, division of rehabilitation science at the University of Texas Medical Branch at Galveston.

Under the prevailing fee-for-service model, doctors and hospitals get paid per procedure or service regardless of the outcome. Medical providers may well get paid more the worse a patient fares, since complications often lead to repeat visits and repeat bills.

Yet under the new joint replacement program, if a hospital’s costs exceed a target price set by CMS — because, say, a patient got readmitted to the hospital with complications — then the hospital faces a financial hit starting next year (hospitals face no penalty through this December, as they adjust to the new system). Conversely, if the hospital keeps costs in check, it could earn a financial reward.

Keeping better tabs on patients

The hope is that hospitals will keep better tabs on their patients after they are discharged, which would require them to communicate with rehab facilities. Patients will benefit from the increased attention, the expectation goes, and health care costs will go down when they experience fewer complications and readmissions.

Hip and knee replacements are the most common inpatient surgeries for Medicare beneficiaries. In 2014, there were more than 400,000 procedures, with the average total Medicare expenditure for surgery, hospitalization and recovery ranging from $16,5000 to $33,000 across geographic areas.

Beneficiaries’ personal expenditures for these procedures will vary. Someone with a comprehensive Medicare supplement plan may have very low out-of-pocket expenses while another with different coverage might face much higher bills after getting a hip or knee replaced.

The government selected 67 geographic areas for participation in the new program, based on the volume of joint replacement surgeries they performed and other criteria. Each region contains a core area with a population of at least 50,000, so less populated rural areas are not included.

Even though they’re not required to, patients should consider using a participating facility for their joint replacement, Ottenbacher said, as the initiative will likely improve the patient experience. Don’t rush to one of these facilities right away, though, since it may take a few months for them to get used to the new system, he said.

For those thinking of traveling for an elective joint replacement, “100 miles is perfectly reasonable,” said Steven Schutzer, an orthopedic surgeon and director of the Connecticut Joint Replacement Institute at Saint Francis Hospital and Medical Center in Hartford. U.S. News & World Report ranked the hospital high in knee replacement, and it draws patients from surrounding states, Schutzer said.

Saint Francis is not participating in the new CMS program. The hospital has created its own care-coordination, alternative-payment model that it uses with certain commercial insurers for patients under age 65. The model accounts for just a fraction of the hospital’s joint replacement business, and Schutzer hopes it will grow as more insurers sign on.

As the largest payer for health care in the U.S., CMS is usually first to make large-scale changes to payment policies. Commercial insurers tend to follow the government’s lead, and many expect that value-based payments will eventually spread throughout the medical system.

Streamlining billing will have to wait

While the new Medicare program is designed to strengthen the quality of care, it won’t improve the billing experience for patients. That’s because it layers financial incentives on top of the existing fee-for-service system, so doctors and hospitals will still issue multiple bills and receive multiple payments. CMS officials have said their long-term goal is to more fully implement value-based payments, a move that would likely result in more streamlined billing for patients.

That would be welcome news for Isaac Sims, 69, of Winston-Salem, N.C. who had both knees and hips replaced after sports and military service injuries left him with excruciating pain. “You end up getting a lot of small bills,” he said. Some of those bills wound up on Sims’ credit report and complicated his efforts to refinance his mortgage.

Billing hassles aside, Sims said he received excellent care at Wake Forest Baptist Hospital in Winston-Salem. The same surgeon did all four surgeries and kept close tabs on Sims’ recovery at the physical therapy office in the same building.

The goal is for every patient to have his own pit crew, regardless of where he gets treated.

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